You have probably heard that the U.S. is the Saudi Arabia of coal, which makes an argument for preferring the Market Vectors product. If the U.S. is where the coal is, it stands to reason that as the world comes to need more energy, it will need more coal. Whether because of perception or reality, this could cause U.S. coal companies to outperform their foreign peers.

Either fund should be expected to be volatile. The chart shows that, as the broader energy sector -- as measured by the Energy Select SPDR ( XLE) -- has gone down 25% at its worst, KOL dropped 45% at its trough. This can work on the upside too. In 2007, XLE was up 40% and BTU, as a proxy for coal stocks, jumped 60%.

As the current bear market works through the process of finding a bottom, which could take several months, it may not make sense to add a lot of octane to a diversified portfolio. But if that's your aim, natural resources might trump technology.

Power of Investing
Coal vs Coal
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Source:
At the time of publication, Nusbaum held none of the positions mentioned in the story, although they may change at any time. He is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.

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